The government on Monday announced suspension of onion exports till January 15 in a last-minute effort to cool prices of the poor man's essential vegetable from the prevailing high of Rs. 60-70 a kg.
In a twin strategy, while the farm cooperative major and regulating agency Nafed (National Agricultural Cooperative Marketing Federation) and 12 other agencies have been directed to halt issuance of export clearance, the MEP (minimum export price) for onions has also been raised more than double from $ 525 a tonne to $1,200 with immediate effect.
As a result, even those onion exporters who have already secured NOCs (no objection certificates) from the regulating agencies but have not executed their export orders will not be able to do so below the increased price. “We have decided to voluntarily suspend issuing NOC to onion exporters till January 15 and have also raised the MEP to US$ 1,200 per tonne for those NOCs which are yet to be executed,” a Nafed official said after the decision to suspend exports was taken at an emergency meeting here.
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Within a couple of days, retail price of onions soared to Rs. 60-70 a kg across the country from an existing high of Rs. 35-40 a kg. While wholesalers have been attributing the earlier high prices to supply constraints owing to unseasonal rains in Maharashtra (especially Latur where the crop was impacted), Gujarat and southern States, the sudden surge in prices is owing to a sharp increase in exports, apart from various stakeholders holding back the produce from entering the market.
High production cost
This is evident from the fact that way back in May this year, Nasik-based National Horticulture Research and Development Foundation (NHRDF) Additional Director Satish Bhonde had gone on record saying that although the country's onion production this year was likely to touch a record 95 lakh tonnes, it may not result in a sharp fall in prices due to high investment costs involved.
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In a clear indication that high yield would not mean lower prices, Mr. Bhonde had said: “Use of crop technology and irrigation have improved onion yields, though acreage remained at last year's level of 5.5 lakh hectare…The wholesale prices of onions are unlikely to fall significantly because farmers are storing the crop in a big way. Also, higher production cost may not allow them to sell at lower rates.”
According to NHRDF data, wholesale price in late May for onions were at Rs. 6-7 a kg at Lasalgaon in Maharashtra, Asia's biggest onion market.
India has three seasons for onion — kharif (winter), late kharif and rabi (summer).